Sunderland firms share almost £100m in virus loans

Companies in the city had received 3,566 loans worth £96.9m through the Bounce Back Loan Scheme by October 4, British Business Bank figures show.

The loan scheme helps small and medium-sized businesses hit by the pandemic borrow between £2,000 and £50,000 – but suspected fraud and firms’ inability to repay the money could cost taxpayers tens of billions, an official report has warned.

A report by public spending watchdog, the National Audit Office (NAO), warned the Government could face huge losses due to fraudulent claims and firms being unable to repay.

Nationally, 1.3 million payments worth £38bn had been issued through the scheme.

The Department for Business, Energy and Industrial Strategy estimate that 35% to 60% of borrowers could fail to repay the money – up to £26bn.

Gareth Davies, head of the NAO, said the Government had acted decisively to get cash firms quickly but added: “Unfortunately, the cost to the taxpayer has the potential to be very high.

“Government will need to ensure that robust debt collection and fraud investigation arrangements are in place to minimise the impact of these potential losses to the public purse.”

A Government spokesman said the NAO report showed that its loan schemes have provided a "lifeline” to thousands of businesses.

He added: “We targeted this support to help those who need it most as quickly as possible and don’t apologise for this. Any fraudulent applications can be criminally prosecuted.”